The Payments Ecosystem
The Payments Ecosystem
The payment industry is always evolving and looking for more innovative solutions and a faster way for consumers to pay. From the perspective of the everyday consumer, processing payments might seem pretty simple. Either you're accepting electronic payments or making a purchase. You may not know that there is a very complex, behind-the-scenes operation occurring. In this article, we will reveal who exactly is involved and what role they play in the payments ecosystem!
The payment ecosystem begins with...
The Issuing Bank:
Issuing banks govern the direct relationship with consumers. When you open up a bank account at any bank of your choice, the bank typically grants you an account along with checks and a debit and/or credit card. This is the beginning of the payment network, as it grants consumers access to their accounts by allowing them to make payments with their credit or debit cards at any location.
Next, we have...
The Card Brands:
The card brands work in conjunction with the banks to provide a connection to their network. This is why when you receive a card from the bank, it contains, most of the time, a VISA or MasterCard logo. The card brands provide the necessary infrastructure to connect the issuing bank with the merchant who will be receiving the payment from their members. In addition, card brands regulate businesses that accept payments and are responsible for creating regulations for accepting payments.
Processors are responsible for providing merchant accounts to business owners. These accounts come with certain perks. For instance, those who open an account with Redde will receive perks like: online reporting portals, equipment for accepting payments, customer service/tech support for their business, next-day funding, higher limits, and more!
The processor cheers on the business and provides the main support whenever an issue arises. Processors also connect the business to the card brand networks!
Next, we go to...
The Acquiring Banks:
Acquiring banks typically sponsor processors and send payments to the business owners. They serve the role of depositing the merchant's funds into their bank account. Acquiring banks also regulate what business types the processor can accept and board.
The payments industry is very complex and it can be confusing. When merchants become educated about the payment ecosystem, they can learn how to save money by properly pricing their goods with payment fees in mind. If a merchant knows how much they will be charged for the many different ways there are to accept credit cards, they can choose a preferred method that will end up saving them money. Now that merchants comprehend all of the moving parts of the ecosystem, they can understand what they pay for and why! Educating merchants is a top priority of ours! Learning about the payments ecosystem, billing, or even reading statements can help you make more informed decisions that benefit your business. Plain and simple—the more you learn about this fast-paced industry, the more your business can save!
There is so much more to be discovered; keep on learning!
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